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Opec cuts oil demand view, supply gap shrinks

London, September 12, 2011

Opec cut its forecast for global oil demand growth next year because of a worsening economic outlook and said a disappointing economic performance in top consumer the United States could further weigh on fuel use. 

The Organization of the Petroleum Exporting Countries, in a monthly report on Monday, also said concerns were easing about a tight oil supply and demand balance and that it expected Libyan oil output to return to full capacity in less than 18 months, more quickly than some estimates.

'The weaker economic recovery is negatively impacting oil demand,' OPEC said in the report. 'Looking ahead, the perception of market tightness and worries of supply shortages in the fourth quarter appear to be easing.' 

Deepening concerns over Europe's sovereign debt crisis and slowing global growth are weighing on oil prices, which on Monday were trading around $111 a barrel, some $16 below their 2011 high reached in April.

World oil demand will increase by 1.06 million barrels per day (bpd) in 2011, OPEC said in the report, 150,000 bpd less than expected last month. The growth estimate for next year was lowered by 40,000 bpd to 1.27 million bpd.

OPEC, whose 11 members pump more than a third of the world's oil, said the demand slowdown was not just in developed economies with barely growing oil markets but also in China and India, which are expected to drive the world's future growth.

 The report said a disappointing performance by the U.S.
economy, still the world's largest oil consumer, could further reduce demand growth next year by 200,000 bpd.

OPEC's reduction in next year's demand growth forecast is smaller than that of the U.S. government's Energy Information Administration, which last week cut its estimate by about 250,000 bpd to 1.39 million bpd.

Another closely watched oil report is due on Tuesday from the International Energy Agency, adviser to 28 industrialised countries. The IEA expects consumption to climb by 1.61 million bpd in 2012, the highest of the three top forecasters.-Reuters




Tags: Opec | cuts | Oil demand | forecasts | shrinks | supply gap |

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